Disadvantages of Using Standard Costs and Variances Include All of the Following

question 77

Multiple Choice

Disadvantages of using standard costs and variances include all of the following except

• A)the excessive cost to keep standards up-to-date.
• B)companies that pay employees a salary because direct labor is a fixed cost rather than a variable cost.
• C)those manufacturing costs that enter Work in Process Inventory are recorded at standard cost, rather than actual cost.
• D)traditional standards can promote unfavorable employee behavior.

---

Definitions:

Net Liability Balance Sheet Exposure

The total amount of liabilities minus assets, indicating a company's financial position and potential exposure to risk if liabilities exceed assets.

Translation Adjustment

An accounting entry that reflects the impact of currency fluctuations in the financial statements of a company with operations in foreign currencies.

Foreign Currency

Currency used that is not the domestic currency of the country in which a transaction is being conducted.

Net Asset Balance Sheet Exposure

The risk that the value of a company's assets minus its liabilities, measured in its reporting currency, will decrease due to foreign exchange rate fluctuations.